Customer Loyalty without the points
The world is made up of billions of people. All individuals, but they have common interests, things that appeal to them, things that they need and things that they like.
Based on these ‘feelings’ people form clubs, societies, political parties and all kinds of groups.
In these groups, people share opinions and communicate with relevance.
When you have a good or service that people like – they tell you about it by giving you money for it.
You might not realise it, but when they do, you’ve created a group of your own. They’ve joined an exclusive group made up of people that have given your business money, it’s [insert your business name] customer club.
Making the most from your data
As a business you track the goods and services that appeal to your customers every time you make a sale.
If you are selling online then using marketing platforms such as Websand you’ll be able to link the individual sales to individual customers.
Once you understand which customers like which goods and services, then you have a great foundation to build loyalty.
When Tesco moved online
A great example of this was when Tesco first launched online grocery shopping a few years back.
If you entered your Tesco Clubcard number as part of signing up, your shopping basket was magically filled with the items you usually bought.
A recall a few people at the time of the introduction being absolutely amazed by this. Perhaps they didn’t realise that Tesco were rewarding them with Clubcard points for providing information about themselves and shopping habits?
Points don’t always mean Loyalty?
Perhaps you’ve noticed I’ve not spoken about points yet. That’s because points are a mechanism you can use to create loyalty.
It’s not the case that as soon as you create points or issue a stamp card you create loyalty. It’s more complex than that.
You need to have a great service, a great proposition that people want to buy and are willing to tell other people about.
Loyalty is build on understanding three key things.
a) who your best customers are.
b) how you can retain their business.
c) how can I find more people like my best customers.
It all starts with the data.
Here are some recent examples launched by major retailers in the UK. Waitrose (myWaitrose) and Marks and Spencer (Sparks).
It’s not just Waitrose anymore it’s myWaitrose
More recently, Waitrose have introduced ‘myWaitrose’. It’s a really smart and simple idea.
Customers can pick 10 items that they usually buy – or want to buy. They will get 20% off those products every time they buy them.
For Waitrose, this helps to build customer loyalty, prevent shopper switching and also have other huge benefits.
They know what people have bought, but they now know what people ‘want’ and that can be a very different thing.
I’d expect that the 20% discount would stimulate buying behaviour, but it’s human nature to add a few occasional expensive things into the basket as you’ll get 20% off when you buy them.
Based on that, I’d assume that Waitrose will validate the people that actually do buy the 10 things that they say they want.
They are also breaking through the supermarket price war by making a price commitment to customers on an individual basis – based on what they want to buy! Very clever.
The 10 items that have been selected are a huge help to the buyers in Waitrose (or should be). If they are using this data, it should an extra level of sophistication to their existing buyer forecasts.
It would be really interesting to know if Waitrose are using the data in this way, and if they are, what effect the ‘my favourites’ is having on their buying schedules (and on suppliers).
Marks and Sparks
Marks and Spencer have also entered the loyalty space recently with the Sparks programme.
It’s got a parallels with the myWaitrose, however it’s more generic on the offer side as the customer can select discounts in specific categories.
It also has a points element to it which you can use to get access to extra discounts, VIP access to events and special occasions.
So Marks and Spencer are spend based points to unlock sales promotions which customers can select. Rather than pushing vouchers to spend in store or redemptions.
Sparks is a interesting proposition, a mashup of different loyalty mechanics, I’ll keep a look out for future case studies on how it’s been received.
Your groups and your business
Understanding which groups you belong to personally can help you to build a strategy for your business and then tools such as Websand can help you to put these strategies into action.
If you want any help or need a chat to talk through some ideas you have on building customer loyalty within your business please get in touch.
Also published on Medium.